Aspen Adopts Poison Pill After Endurance’s $3.2 Billion Bid

Apr 17, 2014 4:17 pm ET

(Updates shares the fifth paragraph.)

April 17 (Bloomberg) -- Aspen Insurance Holdings Ltd. adopted a so-called poison pill to discourage a hostile takeover after rebuffing a $3.2 billion buyout offer from Endurance Specialty Holdings Ltd. Aspen declined the most since February in New York trading.

The one-year plan will allow shareholders to buy stock at discounted prices if a person or group acquires 10 percent or more of the company, according to a statement today from Bermuda-based Aspen. The threshold is 15 percent for passive, institutional investors. The move is meant to make a hostile takeover too costly.

Endurance made its cash-and-stock offer public April 14, saying crop insurance would complement Aspen’s offerings in the Lloyd’s of London market, lead to better underwriting and save costs. Aspen called the offer “ill-conceived.”

“The rights plan is designed to deter abusive tactics from being used in a proposed takeover,” Aspen said in today’s statement. It will also “provide that any transaction would appropriately reward our shareholders and be beneficial to our company.”

Aspen fell 2.1 percent to $44.45 at 4:01 p.m., compared with Endurance’s $47.50-a-share offer. Aspen had rallied 11 percent to $43.77 the day the offer became public. Bermuda-based Endurance slipped 0.9 percent to $50.93 today.

Endurance Chief Financial Officer Michael McGuire criticized Aspen’s move as the act of an “entrenched board of directors” in a separate statement today.

“Aspen shareholders now have further evidence of their board’s deliberate actions to prevent them from receiving attractive value for a strategically sound acquisition,” McGuire said. “We remain fully committed to delivering our highly attractive premium offer to Aspen shareholders.”

Goldman Sachs Group Inc. is Aspen’s financial adviser. The company is getting legal help from Wachtell, Lipton, Rosen & Katz and Willkie Farr & Gallagher LLP.